FedFin Analysis: FDIC Presses Targeted Coverage; Open to Excess Coverage, Collateralization, MBRs

In this report, we follow our initial assessment of the FDIC’s deposit-insurance reform report with an in-depth analysis of its recommendations and their prospects. Aspects of this report reiterate conclusions initially noted in the agency’s Friday report on Signature Bank’s failure (see Client Report REFORM222), noting in particular the sharp growth of uninsured deposits at larger banks and the growing risk of social-media runs. The new report also states that FedNow is likely to exacerbate run risk which increases if open banking advances.

DEPOSITINSURANCE119.pdf